Procurement professionals must take a long-term view of risk as they look to operate in an increasingly volatile, uncertain, complex and ambiguous – or VUCA – world , a conference was told.
Jim Townsend, CPO at Walgreens Boots Alliance, told the CIPS Global Conference many organisations are preparing for a huge period of change as they deal with fallout from the Covid-19 pandemic and the Black Lives Matter movement, with the subsequent highlighting of diversity and inclusion.
To prepare for this era of huge change, Townsend said it is important for procurement to “press pause, recognise that the world's changing and invest some time into understanding this”.
“Look beyond the three-month horizon to a 12, 24, 36, 48-month horizon, and understand what those changes may be, and make sure that your long-term plans take those risks into account,” he said.
“Make sure that you're building out the capability from a team perspective, from a tools perspective to ensure that you can flourish in that new world and really think about those investments that you need to make.”
Townsend added that firms are already experiencing the next phase of this uncertainty, as commodity prices climb and the cost of ocean freight, raw materials and utilities increase.
As a result, it is critical for procurement to “make the time to think about it now”, he added.
“You look at every single sort of report around what's happening in the marketplace at the moment and commodity risk, they're all telling us the world's getting turned upside down at this point in time. They're all telling us that it's going to be pretty turbulent.
“Some would argue that there's a boom cycle that we're going into for a period of time. Not many people could actually tell you whether that's for six months or 12 months but we're going to have a degree of uncertainty and complexity that many of us haven't had to cope with before within our careers,” he said.
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